China's yuan is forecast to drift up over the coming year as the monetary a...
BENGALURU - China’s yuan is forecast to drift up over the coming year as the monetary authorities keep a tight leash on the partly-managed currency and prevent it from falling through the psychological 7 per dollar level any time soon, a Reuters poll showed.
The yuan tumbled 2.5% in May, its biggest drop in 10 months, after U.S. President Donald Trump slapped 25% tariffs on $200 billion of Chinese imports, up from 10% previously. To stop the currency from falling further, the People’s Bank of China intervened late last month and kept the daily reference rate stronger than the current 6.9 per dollar.“China fixed the USD/CNY central parity just below 6.90, and its officials warned of huge losses for those who sought to speculate against the Chinese yuan. There is less fear that the Chinese yuan will depreciate past 7 against the USD, for now,” said Philip Wee, FX strategist at DBS.
That led to heavy capital outflows, triggering a 25% plunge in China’s stock market in a year and sparking the highest volatility since the financial crisis of 2008. The total number of respondents in the June Reuters poll who had a 7 per dollar yuan forecast anywhere on the horizon - one, three, six and 12-month end periods - rose to 11 from just five in the previous survey.Of 31 currency strategists in the June poll who answered an additional question, about half said the yuan will not breach the 7 per dollar rate any time soon. But 12 said it would happen in the next 12 months, including one who said within a month.
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